Western Alliance Bancorporation (WAL) Q2 2024 earnings summary

Executive summary

• Q2 2024 net income was $193.6 million and EPS was $1.75, up sequentially but down year-over-year, reflecting a focus on earnings growth, risk management, and liquidity.

• Core deposit growth reached $4 billion quarter-over-quarter and $15.2 billion year-over-year, with C&I and commercial segment loans driving $1.7 billion in growth.

• Tangible book value per share rose to $48.79, up 3% sequentially and 13% year-over-year.

• Total assets reached $80.6 billion, up 4.7% from Q1 and 18.2% year-over-year.

• Nonperforming assets increased to 0.51% of total assets, with asset quality normalizing and CRE exposure under close monitoring.

Financial highlights

• Net revenue was $771.8 million, up 5.9% sequentially and 15.3% year-over-year; net interest income was $657 million, up $58 million from Q1.

• Net interest margin improved to 3.63% from 3.60% in Q1 and 3.42% a year ago.

• Non-interest income was $115 million, down $15 million quarter-over-quarter, mainly due to lower equity investment and mortgage revenue.

• Non-interest expense was $487 million, up 1% sequentially and 25.7% year-over-year, driven by higher deposit and insurance costs.

• Provision for credit losses was $37.1 million, up from $15.2 million in Q1, reflecting higher net charge-offs and loan growth.

Outlook and guidance

• 2024 guidance raised: loan growth target increased to $4.5 billion and deposit growth to $14 billion, with NIM expected to remain around 3.60%.

• Net interest income forecasted to grow 9%-14% for 2024; non-interest income expected to rise 10%-25% from 2023 baseline.

• CET1 capital ratio expected to remain at or above 11% as loan growth continues.

• Net charge-offs expected to remain low at 15-20 basis points of average loans for the year.

• Management continues to monitor CRE portfolio growth and enhance credit monitoring amid economic uncertainty.